Consumer finance companies have ushered in a round of financing. 9 consumer finance companies have completed financing in 4 months, and 2 consumer finance companies have completed financing in the most recent week. As a non-bank institution supervised by the China Banking and Insurance Regulatory Commission, consumer finance companies are the main force in the current consumer credit market. On the other side of the intensive financing and business expansion of these consumer finance companies, some institutions have begun to leave the market, especially the news that the former leader Home Credit Consumer Finance has recently re-distributed or sold part of its equity, which has attracted great attention from the industry.
Someone is busy with financing
On June 22, Haier Consumer Finance successfully raised a syndicated loan of RMB 510 million. On June 20, Immediate Consumer Finance raised 1.477 billion yuan by issuing inter-bank public offering ABS (also known as credit asset-backed securities).
This month, Suyin Kaiji Consumer Finance and Jinmeixin Consumer Finance completed financing, and each raised 300 million yuan and 500 million yuan respectively in the form of syndicated loans and shareholder capital increase. Earlier, Xiaomi Consumer Finance, Ping An Consumer Finance, Jincheng Consumer Finance, Hubei Consumer Finance and Zhongyuan Consumer Finance completed the “blood replenishment” by different means.
Respondents said that the financing wave this year is related to the abundant market capital and low financing costs. A reporter from the Shanghai Securities News noticed that for the latest ABS issued by Consumer Finance, the coupon rate of Priority A is 3.3%, and the coupon rate of Priority B is 3.8%, both of which are the lowest in history.
Another major reason for this round of financing is that consumer finance companies want to speed up business expansion. As a non-bank institution, consumer finance companies cannot absorb deposits from the public, and the main sources of funds for conducting business are capital increase from shareholders, borrowing from financial institutions, inter-bank lending, issuance of ABS or financial bonds, etc.
Among them, the issuance of ABS by selling assets is more popular. “The advantage of this financing method is that there is no problem of maturity mismatch, and the source of debt repayment funds is the cash flow of the asset package. A simple understanding is that as much as the funds are recovered, as much as possible. Issuing ABS sells assets and will not increase the company’s leverage. On the contrary, it can increase the liquidity of assets.” A researcher from a rating company explained that the credit subject of ABS is asset credit, which means that even if the credit rating of the ABS issuer is not 3A, as long as the assets are good, it can still reach 3A. cost of funds.
Someone wants to leave
While the above-mentioned companies are busy with financing to expand their business, some companies are about to leave due to business failure. For example, the former leader Home Credit Consumer Finance recently reported that it “plans to sell part of its equity.”
Home Credit Consumer Finance is one of the first four pilot consumer finance companies, and is currently the only wholly foreign-owned consumer finance company. It has ranked first in the industry in terms of scale and performance for many years. It has as many as 90,000 employees during its peak period. It also planned to be listed on the Hong Kong stock market. and has submitted a prospectus. In 2020, the assets and liabilities of Home Credit Consumer Finance will be significantly tightened, and the performance will also decline. At the beginning of 2021, the founder of its shareholder PPF Group passed away unexpectedly, adding more variables to the company’s operations.
Yu Baicheng, Dean of Zero One Research Institute, said that in the early days, Home Credit Consumer Finance mainly adopted offline network promotion, cooperated with mobile phone digital stores to develop installment business, and quickly gained dividends from the development of the digital market, becoming the largest consumer in the country. Finance company. However, after the rapid development of e-commerce driven by the mobile Internet, low-cost online consumer loans have become the mainstream of consumer finance business in recent years. Coupled with the strong supervision situation, Home Credit’s heavy consumer finance model, which is highly dependent on offline and human resources, is facing challenges. After that, Home Credit started the online transformation, but it was not successful.
The defeat of Home Credit did not affect the popularity of the market and the value of licenses. Many banks, especially city commercial banks, still highly favor this industry. In the first half of this year, Bank of Ningbo and Bank of Nanjing successively took controlling stakes in Huarong Consumer Finance and Suning Consumer Finance, hoping to expand the territory of retail finance. “Consumer finance companies, as non-bank institutions specializing in personal consumption loan business, can expand their business across the country, and city commercial banks subject to regional business restrictions are looking at this.” Yu Baicheng said.